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CSRD - EU Regulations

Companies that fall under its remit must include sustainability-related information in their annual reports.

CSRD: Corporate Responsibility Reporting Directive

 

ESG reporting and preparation of a Sustainability Report

Boards play a crucial role in advancing ESG initiatives. We provide insights into the reasons, objectives, and effective methods for overseeing ESG practices.

A sustainability report is a document that companies publish to disclose their non-financial performance information to external stakeholders. These reports cover a wide range of topics related to environmental, social, economic, and governance issues. By sharing details about their ESG (environmental, social, and governance) impacts, companies allow investors, employees, customers, and the public to gain a clearer understanding of how their business activities affect the environment and society. Additionally, sustainability reports help assess the risks and opportunities that companies encounter. Beyond mere data, these reports serve as a communication tool, aiming to convince sceptical observers that the company’s actions are genuinely aligned with responsible and ethical practices.

Sustainability reports have gained significant prominence because investors and other stakeholders are urging companies to provide greater transparency regarding their sustainability initiatives and their strategies related to environmental, social, and governance (ESG) matters. These reports go beyond merely stating aspirations; they actively assess the action plans implemented to achieve sustainability goals. Moreover, several new legislative documents focused on ESG are either already in effect or currently in preparation. These regulations emphasize the need for companies to disclose comprehensive sustainability information, reinforcing the importance of sustainability reporting in today’s business landscape.

Directive (EU) 2022/2464 of the European Parliament and of the Council of 14 December 2022 (Corporate Sustainability Reporting Directive (CSRD)) modifies the previous directive on non-financial reporting, expands the scope of companies obliged to disclose information, and increases the requirements on the content of disclosures as defined in the ESRS standards. Companies that fall under its remit must include sustainability-related information in their annual reports.

EU Taxonomy  

The European Union (EU) has introduced the EU Taxonomy, which complements the Corporate Sustainability Reporting Directive (CSRD). The EU Taxonomy serves as a classification system for economic activities, specifically identifying those that align with environmental sustainability. It defines criteria for six key environmental objectives:

  • Climate change mitigation
  • Climate change adaptation
  • Sustainable use and protection of water and marine resources
  • Transition to a circular economy
  • Pollution prevention and control
  • Protection and restoration of biodiversity and ecosystems

By providing clear definitions, the EU Taxonomy assists companies, investors, and policymakers in identifying environmentally sustainable activities. An economically sustainable activity is one that significantly contributes to one or more of these environmental objectives, while avoiding harm to any of them. Additionally, such activities must adhere to minimum safeguards related to human rights and workers’ rights.

Before the implementation of the Corporate Sustainability Reporting Directive (CSRD), European companies predominantly relied on the voluntary Global Reporting Initiative (GRI) standards. These GRI standards, in conjunction with the Task Force on Climate-related Financial Disclosures (TCFD), served as the foundation for the development of the European Sustainability Reporting Standards (ESRS). The ESRS, now adopted by the European Commission, will establish mandatory disclosure requirements for approximately 50,000 companies under the CSRD.